Action Alert: Missouri Historic Tax Credit and Rebuilding Communities Programs
From the Missouri Coalition for Historic Preservation and Economic Development (www.savehistorictaxcredit.org):
It is important that you contact the Department of Economic Development by
Friday, July 1 to express your support for the state Historic Tax Credit and
Rebuilding Communities programs.
DED has called an “incentives review committee” to review and deliberate on
the future of the state’s economic development incentives. This committee
called for public comment on its review methodology (a methodology that
called for extensive concern for “consumer” and “taxpayer” expectations and
input) in early May, but has never made a call for public input on the
incentives themselves.
Now, the committee appears to be wrapping up its work without hearing from
our broad coalition of statewide supporters. This may lead the Department
to make recommendations that would be disastrous to the future of these
programs.
Please compose your comments on the benefits of the Historic Tax Credit and
Rebuilding Communities programs to Missouri’s economy and communities, as
well as your evidence for why the programs are outstanding successes as they
are currently formulated, and not in need of change.
It is important that DED hears the perspectives of the developers, Realtors,
preservationists and concerned citizens in our Coalition.
Please fax and email your comments to:
missouridevelopment@ded.mo.gov
Fax: 573-526-7700
Please also send a copy of your comments to me at 314-621-7151 /
joehodes@yahoo.com.
Please find below some talking points on the importance of the programs
(additional talking points are at the end of the email).
Historic Tax Credit Program:
– An arbitrary state standard of “return on investment” is an unsuitable and
highly subjective manner by which to measure the appropriate amount of funds
for a redevelopment project. Given the wide differences between real estate
markets and redevelopment projects, there is no reasonable objective measure
for return on investment, and therefore it should not be used as an
evaluation method. It will also make the Historic credit subject to
political involvement that will destroy the market approach.
– The open market should determine which historic renovation projects are
undertaken. Currently, the real estate market determines the feasibility of
historic renovation projects. DED threatens to inject itself into the
market-driven process with unnecessary discretionary controls.
– From $1.00 in State Historic Tax Credits:
$1.25 is returned directly to state coffers through taxes.
$1.78 in state personal income taxes, sales taxes, corporate income taxes
and other revenue is generated.
$4.00 is invested in each project and the state’s economy from private
sources before any credits are issued.
According to studies by Rutgers University, the Missouri Department of
Economic Development, Missouri Preservation, and accountants Rubin, Brown,
Gornstein & Co., the State Historic Tax Credit is a revenue-generating
program that returns to the state far more in direct benefits than is spent
in credits.
Rebuilding Communities Program:
– This credit is the only economic incentive targeting professional and
technology start-ups like biotech and computer firms. According to a 2004
study conducted for the Missouri Economic Development Council (MEDC), the
state is lagging behind others in their incentives for these cutting edge
firms. See http://www.taimerica.com/missouri/reports.html for more details.
– Unlike other tax credits, equipment must be purchased and employees hired
before the issuance of the tax credits. Sales and payroll taxes are paid to
the state before the credits are issued. For each dollar of credit, $1.50
is invested in equipment before the credit is issued; eventually, each
dollar returns $3.00 to the state.
– The credit helps rebuild the economic engine in distressed communities.
Just as the Historic Preservation Credit helps restore economically obsolete
buildings, the Rebuilding Communities Credit fills those buildings with
tenants in the areas of the state that need them the most.
If you have any questions, please do not hesitate to contact me by replying
to this email or contacting me at 314-518-1797.
Thanks you for your continuing support of these programs.
Sincerely,
Joseph F. Hodes
______________________
Additional Historic Tax Credit Talking Points:
– There is no reason to change the Historic Tax Credit Program. The credit
is the only widespread, successful economic development tool in use in
Missouri today. Numerous independent studies have determined that the
credit returns more to state coffers than it releases in credits. No
one-developers, preservationists, economic development experts,
politicians-has advocated the change proposed by the department.
– The Historic tax credit works precisely because it is a market-driven
program not subject to the state picking winners and losers. An
unpredictable move like injecting a governmental “return on investment”
evaluation into the process will bring a halt to redevelopment. Developers
and homeowners will not buy a building, pay carrying costs, insurances,
taxes and architect fees without knowing if a credit is available. Banks
and other funders will refuse to lend to buy historic properties when they
don’t know if the credit will be available.
– The Federal government recognizes that its historic tax credit must be
consistent and uncapped in order to work, and it has thus remained so.
– The open market should determine which historic renovation projects are
undertaken. Currently, the real estate market determines the feasibility of
historic renovation projects. DED threatens to inject itself into the
market-driven process with unnecessary discretionary controls.
– An arbitrary state standard of “return on investment” is an unsuitable and
highly subjective manner by which to measure the appropriate amount of funds
for a redevelopment project.
– Given the wide differences between real estate markets and redevelopment
projects, there is no reasonable objective measure for return on investment,
and therefore it should not be used as an evaluation method. It will also
make the Historic credit subject to political involvement that will destroy
the market approach.
– Multiple safeguard and levels of regulation already exist. Multiple
requirements must be met for the credit to be issued. First, a building
must be listed on the National Register of Historic Places. Second, the
developer’s rehabilitation plan must be approved by the State Historic
Preservation Office as consistent with the building’s history. Third, the
developer must invest at least four times the amount of the resulting credit
for the credit to be issued at the completion of the rehabilitation work.
Injecting a governmental or political approval based on a “return on
investment” or any other arbitrary measure would destabilize Missouri’s
historic redevelopment industry (the national leader) and destroy the
credit’s many benefits to the Missouri economy.
– This approach was rejected by the legislature when the credit was passed.
– From $1.00 in State Historic Tax Credits:
$1.25 is returned directly to state coffers through taxes.
$1.78 in state personal income taxes, sales taxes, corporate income taxes
and other revenue is generated.
$4.00 is invested in each project and the state’s economy from private
sources before any credits are issued.
According to studies by Rutgers University, the Missouri Department of
Economic Development, Missouri Preservation, and accountants Rubin, Brown,
Gornstein & Co., the State Historic Tax Credit is a revenue-generating
program that returns to the state far more in direct benefits than is spent
in credits.
Additional Rebuilding Communities Talking Points:
The Rebuilding Communities Credit provides a 40% transferable tax credit (up
to $75,000 annually for up to 4 years) for the purchase of equipment by
manufacturing, technology, biomedical, telecommunication and professional
firms of fewer than 150 employees that start up or move into distressed
communities. It also provides such businesses with a 1.5% credit for
employment costs for up to 3 years, and grants a one-time credit to
companies already located in a distressed community who upgrade their
equipment (25% of the cost up to $75,000).
Rebuilding Communities is the only state credit that applies to the
expansion of existing firms. Another weakness pointed out by the MEDC study
is the lack of incentives for existing firms to expand.
The credit is the only incentive working to keep the economic benefits from
research conducted at Missouri universities here in the state. For too
long, exciting and profitable research conducted at Missouri universities
spawned firms that moved to the East or West coasts to grow. Rebuilding
Communities has helped keep those profitable firms here in Missouri and
attract world-class life sciences companies from other states.
Over 200 communities throughout Missouri are all or partly distressed under
Missouri law. This includes many rural communities as well as parts of
medium-sized and large cities. Dozens of communities have taken advantage
of the Rebuilding Communities Program, including:
Bunker – Columbia – Eminence – Hazelwood – Kansas City – Lohman – North
Kansas City – Rolla – St. Louis – Summersville – Thayer – Winona
